UOB Group’s FX Strategists see USD/CNH facing a tough resistance in the vicinity of 6.5000 in the near term.
24-hour view: “We highlighted yesterday that USD ‘could edge above 6.4800 but the major resistance at 6.4930 is not expected to come under threat’. Our view was not wrong as USD rose to 6.4860 before pulling back. Upward momentum is beginning to wane and this coupled with overbought conditions suggests that USD is unlikely to strengthen much further. For today, USD is more likely to trade between 6.4680 and 6.4900.”
Next 1-3 weeks: “We have expected a stronger USD since early last week. Our view was not wrong and in our update yesterday (22 Jun, spot at 6.4690), we indicated that USD is still strong but ‘overbought conditions suggest that 6.4930 may not come into the picture so soon’. While USD rose to 6.4860 during NY session, shorter-term momentum appears to be struggling. That said, USD could move above 6.4930 but may not be able to maintain a foothold above this major level (next resistance is at 6.5000). On the downside, a breach of 6.4500 (‘strong support’ level was 6.4400 yesterday) would indicate that the current USD strength has run its course.”
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